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School Finance: the Big Picture  Start by understanding the very complex school finance system in its basic parts.  Kansas school districts will receive and spend about $5.5 billion from all sources and for all purposes this year.  Divide that by about 460,000 students comes to about $12,000 per student – three times the base budget per pupil.  It may be helpful to divide that $5.5 billion roughly into four major categories.

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Trends since 1992 law implemented  Since 1993, total funding more than doubled ($2.5 to $5.5 billion); base and enrollment up just 11%.  Special ed, at-risk, etc. four times higher.  LOB funding 10 times higher than 1993.  Federal funding nearly three times higher.  All other nearly five times higher (mostly for capital outlay, construction and KPERS).  (See Handout on School Funding)

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How the system has changed  State funding much more targeted at special needs students; local funds for general programs.  Much more reliance on local funding (LOB, capital outlay and bonding, other local) – which is limited by state, with some state aid in some programs.  Despite No child Left Behind costs, percentage from federal remains small part of budget.  Despite increased spending on K-12 education, school revenues have actually decreased compared to total personal income in Kansas.

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What Happened? (Handout)  High school and college completion rates at highest levels in state history.  Increase in ACT scores, percent of students tested, students taking college prep classes: all at highest levels.  10 years increased percentage of students scoring proficient on state reading and math tests, significantly narrowed achievement gap among student groups.  Kansas 7 th out of 50 state on 11 measures of education.  Progress despite significant increase in at-risk students.  Kansas ranks near top of region on economic results (higher inc0me, lower poverty).

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Equalization Features in the Law Equalized by state aid plus 20 mill levy: $1.7 billion – general state aid base only (equal per pupil) $300 million – enrollment weightings (pupil differences based on size, growth, housing costs) $1 billion – program weightings (pupil differences for at- risk, bilingual special ed, vocational, transportation) Equalized by state appropriation or federal aid: $250 million – KPERS school aid, based on payroll $400 million – federal aid, formula-driven Total: $3.65 billion (67% of total funding)

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Equalization Features in the Law “Partially” equalized; state aid paid but significant disparities in local effort remain: $1 billion = LOB partially equalized (to 81.2%, prorated 85%) $400 million = bond and interest payments, $100 million covered state aid Total: $1.3 billion (24% of total funding) No equalization: $450 million – capital outlay, fees, other local revenues Total: $450 million (8% of total)

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State AidLocal RevenueFederal Aid General Fund General State Aid$1,900 million Special Ed State Aid$430 million 20 Mill State Levy$550 million Other Local Effort$10 million Local Option Budget Supp. Gen. Aid$340 million LOB Property Tax$650 million All Other Bond and Interest Aid$100 million Federal Aid$400 million Other Property Tax$300 million Student Fees (incl. meals)$100 million Other Local Revenue$160 million KPERS Payments$250 million Total$3,020 million (58%) $1,770 million (34%) $400 million (8%)

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State Budget and School Funding  Nearly 60% of total funding comes from state aid.  Increases depend on increase state general fund.  Over 30% of funding from local sources. LOB and capital outlay capped by state, many districts at cap.  Less than 10% of funding comes from federal aid; likely to decline if federal deficit is cut.  What is the likely future of state funding?

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Projections for State Spending National Governors Association predicts most states will face:  Very slow revenue growth if economy recovers, revenue shortfall if “double-dip” recession.  Human service caseloads (especially health care) will grow much faster than revenues.  Significantly underfunded pension obligations; will require significant funding increases even if benefits are reduced going forward. (KPERS in worse shape than many.)

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Kansas Budget Projections  November projection: current year up $200 million.  Next year (FY 2013), lost of $200 million highway fund transfers means only 0.7% net revenue growth.  One-cent sales tax expires in FY 2014 ($350 million).  Caseloads growth: $72 million per year.  KPERS: $40 to $80 million per year.  Rebuild state ending balance for budget stability (like school districts - $120 million increase in balances).  Political pressure to reduce state income tax (50% of state general fund revenue).

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Proposed KASB Positions  Guiding principle: improving educational outcomes for all students.  Legislature, not local districts, must provide suitable finance for state educational outcomes and requirements.  Any new system must provide more funding.  Any new system must have hold harmless provision.  Any change in weightings must provide (1) at least the same funding, (2) more stability, (3) more flexibility.

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Proposed KASB Positions (continued)  No competitive grants for required programs such as at-risk, bilingual.  Block grants, other incentives may be appropriate to expand programs, reward performance and promote innovation if programs are not mandatory.  Expanded local funding must have enhanced equalization to narrow disparities in local effort.  Expanded local funding must be subject to local board approval, not local vote.

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Proposed KASB Positions (continued)  Local sales tax authority raises many concerns; at a minimum, it must be equalized.  Fund all-day kindergarten, enhance early childhood.  State aid must be continued for capital improvement (bond and interest) and restored for capital outlay.  Support concept of multi-year funding, with need for greater stability in state budget to keep commitment.

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Governor’s Concepts Review  Offers opportunity for increased local funding with some equalization features when state funding may be limited for years.  Alternative may be NO increased state funding AND more local authority with NO equalization aid.  May provide increase in both state and local funding.  May provide more stable and flexible use of some funds.  Supporting some aspects of plan could result in positive movement, not deadlock or worse. Career/tech, innovation, performance incentives.

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Governor’s Concepts Review (continued)  Specific numbers unavailable.  Breaks link between increased local effort and equalization; could be much harder for low wealth districts to maintain quality programs, outcomes.  Breaks link between base and weightings.  Increased reliance on local funding sources makes equalization much more difficult because of disparity on local resources.  Current system produced significant improvement and high national ranking – should we risk change?

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Other Issues  KAN-ED – House voted to abolish; Senate agreed to 40% funding cut and study; no decision on future and funding from KUSF or other sources.  Post Audit studies: eliminate funding for non-Kansas students; require state and school employees to live in state.  School Choice: “Why Not Kansas?” campaign.  Tenure, bargaining, licensure issues.  Bullying, screening, other new mandates.

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KASB Proposals Goal: “First in Education, the Kansas Way”  Improving Education – New accountability system, broader college/career goals, individual student focus, strengthen evaluation, public engagement.  Suitable Finance – State funding for all requirement s and outcomes, equity in local funding, maintain at- risk aid; tax policy to support high quality education and other needs.  Local Leadership – Decisions at local level, review mandates; keep independent State Board; no public funding for private schools without local oversight.

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